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EXHIBIT 10.20
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of January 25, 1999, is entered into by and among SIMCALA, INC. (the
"Borrower"), the guarantors identified as such on the signature pages attached
hereto (the "Guarantors;" collectively, the Borrower and the Guarantors are
referred to as the "Credit Parties"), the lenders identified as such on the
signature pages hereto (the "Lenders") and NATIONSBANK, N.A., as Agent (the
"Agent") for the Lenders.
RECITALS
A. The Borrower, the Guarantors, the Lenders and the Agent entered into
that certain Credit Agreement dated as of March 31, 1998, as amended by that
Amendment Letter dated November 9, 1998 (as so amended, the "Existing Credit
Agreement").
B. The Lenders have agreed to execute and deliver this Amendment on the
terms and conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1 GENERAL DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including the preamble
and recitals, have the meanings provided in the Existing Credit Agreement.
SUBPART 1.2 CERTAIN DEFINITIONS. Unless the context otherwise requires,
the following terms used in this Amendment shall have the indicated definitions:
"Amended Credit Agreement" means the Existing Credit Agreement as
amended hereby.
"Amendment No. 2 Effective Date" has the meaning ascribed to such term
in Part 4.1 of this Amendment.
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PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT
SUBPART 2.1 AMENDMENTS TO SECTION 1.1.
(a) The following definitions appearing in Section 1.1 of the
Existing Credit Agreement are hereby amended and restated to read as
follows:
"Applicable Percentage" means, for purposes of calculating the
applicable interest rate for any day for any Loan, the applicable rate
of the Unused Fee for any day for purposes of Section 3.5(b), the
applicable rate of the Standby Letter of Credit Fee for any day for
purposes of Section 3.5(c)(i) or the applicable rate of the Trade
Letter of Credit Fee for any day for purposes of Section 3.5(c)(ii),
the appropriate applicable percentage corresponding to the Total
Leverage Ratio in effect as of the most recent Calculation Date:
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APPLICABLE APPLICABLE APPLICABLE APPLICABLE
TOTAL PERCENTAGE FOR PERCENTAGE FOR PERCENTAGE FOR PERCENTAGE FOR APPLICABLE
PRICING LEVERAGE EURODOLLAR BASE RATE STANDBY LETTER TRADE LETTER OF PERCENTAGE FOR
LEVEL RATIO LOANS LOANS OF CREDIT FEE CREDIT FEE COMMITMENT FEES
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I > 5.00 to 1.0 3.00% 2.00% 3.00% 1.00% .60%
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II < 5.00 to 1.0 2.25% 1.25% 2.25% .50% .50%
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but > 3.75 to
1.0
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< 3.75 to 1.0
III - 2.00% 1.00% 2.00% .50% .50%
but > 2.50 to
1.0
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IV < 2.50 to 1.0 1.75% .75% 1.75% .50% .375%
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The Applicable Percentages shall be determined and adjusted
quarterly on the date (each a "Calculation Date") five Business Days
after the earlier of (x) the date by which the Borrower is required to
provide the officer's certificate in accordance with the provisions of
Section 7.1(c) for the most recently ended fiscal quarter of the Credit
Parties or (y) the date such officer's certificate is actually
delivered to the Agent; provided, however, that (i) the initial
Applicable Percentages shall be based on Pricing Level I (as shown
above) and shall remain at Pricing Level I until the first Calculation
Date subsequent to December 30, 1998, and, thereafter, the Pricing
Level shall be determined by the Total Leverage Ratio as of the last
day of the most recently ended fiscal quarter of the Credit Parties
preceding the applicable Calculation Date, and (ii) if the Borrower
fails to provide the officer's certificate to the Agency Services
Address as required by Section 7.1(c) for the last day of the most
recently ended fiscal quarter of the Credit Parties preceding the
applicable Calculation Date, the Applicable Percentage from such
Calculation Date shall be based on Pricing Level I until such time as
an appropriate officer's certificate is provided, whereupon the Pricing
Level shall be determined by the Total Leverage Ratio as of the last
day of the most recently ended fiscal quarter of the Credit Parties
preceding such Calculation Date. Except as provided above, each
Applicable Percentage shall be effective from one Calculation Date
until the next Calculation Date. Any adjustment in the Applicable
Percentages shall be applicable to all existing Loans and Letters of
Credit as well as any new Loans and Letters of Credit made or issued.
The Applicable Percentage for the Standby Letter of Credit Fee
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for any standby Letter of Credit shall be 1.0% so long as such Letter
of Credit is cash-collateralized pursuant to Section 2.2(l).
"Collateral Documents" means a collective reference to the
Security Agreement, the Pledge Agreement, the Mortgage Instruments, the
Assignment of Cash Collateral Account and such other documents executed
and delivered in connection with the attachment and perfection of the
Agent's security interests and liens arising thereunder, including,
without limitation, UCC financing statements and patent and trademark
filings.
(b) A new definition of "Assignment of Cash Collateral Account is
hereby added to Section 1.1 of the Existing Credit Agreement in the appropriate
alphabetical order to read as follows:
"Assignment of Cash Collateral Account" means that Assignment
of Cash Collateral Account dated as of January 15, 1999 among the
Borrower and the Agent.
(c) The definition of "Consolidated Net Worth" appearing in Section 1.1
of the Existing Credit Agreement is hereby deleted.
SUBPART 2.2 AMENDMENT TO SECTION 2.2. A new clause (l) is added to
Section 2.2 of the Existing Credit Agreement immediately following clause (k),
which shall read as follows:
(l) Cash Collateral. Until such time as the Interest Coverage Ratio is
at least 1.50 to 1.0 for two consecutive fiscal quarters subsequent to December
31, 1999, the Borrower shall pay to the Agent cash, to be held by the Agent, for
the benefit of the Lenders, in a cash collateral account pursuant to the
Assignment of Cash Collateral Account as additional security for the LOC
Obligations in respect of drawings under all outstanding Letters of Credit in an
amount equal to the maximum aggregate amount which may be drawn under such
Letters of Credit. The Applicable Percentage otherwise in effect for the Standby
Letter of Credit Fee with respect to any standby Letter of Credit which is
cash-collateralized pursuant to this clause (l) shall be 1.0% for so long as
such Letter of Credit is cash-collateralized.
SUBPART 2.3 AMENDMENTS TO SECTION 7.1. Section 7.1(m) of the Existing
Credit Agreement is hereby renumbered as Section 7.1(n) and a new Section 7.1(m)
is added to the Existing Credit Agreement which reads as follows:
(m) Monthly Financial Statements. As soon as available, and in
any event within 30 days after the end of each fiscal month of the
Credit Parties, a consolidated balance sheet and income statement of
the Credit Parties as of the end of such fiscal month, together with
related consolidated statements of operations and retained earnings and
of cash flows for such fiscal month, in each case setting forth in
comparative form (i) consolidated figures for the corresponding period
of the preceding fiscal year and (ii) consolidated figures for the
corresponding period of the budget of the Credit Parties for the
current fiscal year, all such financial information described above to
be in a form satisfactory to the Agent.
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SUBPART 2.4 AMENDMENTS TO SECTION 7.11. Section 7.11 of the Existing
Credit Agreement is hereby amended and restated to read as follows:
7.11 FINANCIAL COVENANTS.
(a) Interest Coverage Ratio. The Interest Coverage Ratio, as of the
last day of each fiscal quarter of the Credit Parties, shall be greater than or
equal to:
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Fiscal Year March 31 June 30 September 30 December 31
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1998 1.50 1.50 1.50
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1999 1.15 1.05 1.05 1.05
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2000 1.00 1.00 1.00 1.00
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2001 1.25 1.25 1.50 1.75
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2002 1.75 1.75 1.75 2.00
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thereafter 2.00
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(b) Net Leverage Ratio. The Credit Parties shall cause the Net Leverage
Ratio, as of the last day of each fiscal quarter of the Credit Parties, to be
less than or equal to:
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Fiscal Year March 31 June 30 September 30 December 31
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1998 5.50 5.50 7.00
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1999 7.25 8.25 8.50 9.25
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2000 9.75 10.00 11.25 11.50
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2001 8.75 7.50 6.50 5.50
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2002 5.50 5.50 5.50 5.00
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thereafter 5.00
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(c) Minimum Consolidated EBITDA. At all times the Consolidated EBITDA,
as of the last day of each fiscal quarter of the Credit Parties, shall be
greater than or equal to:
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Fiscal Year March 31 June 30 September 30 December 31
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1998 $ 9,500,000
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1999 $ 9,000,000 $ 8,100,000 $ 8,100,000 $ 7,800,000
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2000 $ 7,800,000 $ 7,800,000 $ 7,800,000 $ 7,800,000
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2001 $10,200,000 $12,100,000 $13,700,000 $16,100,000
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2002 $16,100,000 $16,100,000 $16,100,000 $17,200,000
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thereafter $17,200,000
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PART III
REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES
Each Credit Party hereby represents and warrants to the Agent and to
each Lender that:
(i) each of the representations and warranties of the
Borrower contained in the Amended Credit Agreement or in any
other Credit Document is true as of the date hereof (after
giving effect to this Amendment);
(ii) after giving effect to this Amendment, no
Default or Event of Default exists and is continuing under the
Amended Credit Agreement;
(iii) since the date of the last financial statements
of the Borrower delivered to Lenders, no material adverse
change has occurred in the business, financial condition,
operations or prospects of the Consolidated Parties other than
as previously disclosed to the Lenders; and
(iv) no consent, approval, authorization or order of
, or filing, registration or qualification with, any court or
governmental authority or third party is required in
connection with the execution, delivery or performance by such
Person of this Amendment.
PART IV
CONDITIONS TO EFFECTIVENESS
SUBPART 4.1. EFFECTIVE TIME OF AMENDMENT. This Amendment shall be and
become effective as of the first Business Day upon which each of the conditions
set forth in this Subpart 4.1 shall have been completed to the satisfaction of
the Agent and the Required Lenders (the "Amendment No. 2 Effective Date").
SUBPART 4.1. EXECUTION OF AMENDMENT. The Agent shall have received
counterparts (or other evidence of execution, including telephonic message,
satisfactory to the Agent) of the due execution of this Amendment on behalf of
the Credit Parties and the Required Lenders.
SUBPART 4.2. AMENDMENT FEES. The Agent shall have received from the
Borrower, on the Amendment No. 2 Effective Date, for the account of each Lender,
in immediately available funds, an amendment fee of 0.25% of each Lender's
Commitment.
SUBPART 4.4. ASSIGNMENT OF CASH COLLATERAL ACCOUNT. The Agent shall
have received executed counterparts of the Assignment of Cash Collateral Account
in form of Exhibit A hereto.
SUBPART 4.4. OTHER DOCUMENTS. The Agent shall have received such other
documents relating to the transactions contemplated hereby as the Agent or
counsel to the Agent may reasonably request of the Borrower in writing on or
before the Amendment No. 2 Effective Date.
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SUBPART 4.5. EXPENSES OF AGENT. The Borrower shall have reimbursed the
Agent for all reasonable out-of-pocket expenses of the Agent , including without
limitation, all reasonable fees and expenses of its attorneys, incurred in
connection with the negotiation, preparation or execution of this Amendment.
PART V
MISCELLANEOUS
SUBPART 5.1 FURTHER ASSURANCES. As soon as practicable after receipt of
a written request from the Agent, and in any event not later than 30 days from
the date such request is received by the Borrower, the Credit Parties shall
cause to be delivered to the Agent, in form and content reasonably satisfactory
to the Agent, all documents or other instruments incident to the transactions
contemplated by this Agreement in the reasonable judgment of the Agent.
SUBPART 5.2. REFERENCES. References in this Amendment to any Part or
Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment. As of the Amendment No. 2 Effective Date, all references in the
Credit Documents to the "Credit Agreement" shall be deemed to refer to such
document as amended by this Amendment.
SUBPART 5.3. COUNTERPARTS. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which constitute together one and the same agreement.
SUBPART 5.4. GOVERNING LAW. This Amendment shall be deemed to be a
contract made under and governed by the internal laws and judicial decisions of
the State of North Carolina without giving effect to the conflict of law
principles thereof.
SUBPART 5.5. SUCCESSORS AND ASSIGNS. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 5.6. ENTIRE AGREEMENT. The Amended Credit Agreement, this
Amendment, and the other Credit Documents, as amended hereby, constitute the
entire contract among the parties relative to the subject matter hereof.
SUBPART 5.7. NO OTHER CHANGES. Except as expressly modified and amended
in this Agreement, all of the terms, provisions and conditions of the Credit
Documents shall remain unchanged.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
BORROWER: SIMCALA, INC.,
a Delaware corporation
By: /s/ C. E. Boardwine
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Name: C. E. Boardwine
Title: Pres/CEO
GUARANTOR: SIMCALA HOLDINGS, INC.,
a Georgia corporation
By: /s/ William A. Davies
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Name: William A. Davies
Title: Director
LENDERS: NATIONSBANK, N.A., individually as a Lender
and in its capacity as Agent
By: /s/ Curtis D. Lueker
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Name: Curtis D. Lueker
Title: Assistant Vice President
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